Between a startup accelerator and incubator, what is the difference? Which will do more for your business without taking much? Here’s our own comparison of both.
The road between business idea conception and actualization is usually a very long one. A lot of business owners find themselves unable to actualize their business dreams because of the challenges that they face along the way.
Business accelerators and incubators help to prevent these types of frustrations, help to nurture business ideas, and guide entrepreneurs along the way, sometimes even help them find investors to fund their businesses. However, the term start-up accelerator and incubator are erroneously taken to mean the same thing.
This article helps you clarify the difference between accelerators and incubators so that you can figure out which one would work best for your startup.
Startup Accelerator Vs Incubator – What’s the Difference?
Incubators provide nurturing and assistance to startups that are in the beginning stages of their businesses.
Incubators are for aspiring entrepreneurs that have stumbled upon a business idea with a lot of potential but have no business acumen to take the business from being just an innovative idea, to becoming a full-fledged business.
Incubators are usually more flexible with their timelines. They are willing to nurture the business until it grows, and can provide mentorship for as long as eighteen months or more.
Incubators are usually more focused on local startups. They want to create more jobs locally, and they can help even a slow-growing business, as long as it helps to fulfill an economic purpose of filling a void within a locality.
- Investment Capital
Most incubators are funded by economic development organizations or academic institutions. They do not receive equity participation in the businesses that they help to start up, and they also do not provide capital funding to startups.
However, they provide an environment that allows the startups receive mentorship, and collaborate with other startups. Incubators would usually bring in business experts and seasoned entrepreneurs to provide mentorship and feedback to their candidates.
Startup accelerators have a different operational model. They are usually created for the purpose of helping startups to grow their businesses. They are much like catapults that help move startups to the front of key influencers and investors that may help to contribute to the growth and success of their business.
Accelerators usually work with a strict timeline. They do not allow startups to remain with them indefinitely but for about three to four months and during this period, they help businesses get capital and support from potential investors.
Accelerators also have very strict procedures for selecting their candidates. Usually, they receive applications from several candidates who are made to go through a pre-qualification procedure and then the most qualified or preferred candidates are selected from the bulk. It also doesn’t matter where the startup will be located as accelerators choose candidates from all over the country.
Accelerators may invest in a start-up in exchange for a pre-determined percentage of equity, or provide entrepreneurs with interested investors that they can pitch their business growth and expansion ideas to.
The investors provide the capital for the expansion of the business, and then get equity participation in the business in exchange for the invested amount.
Startup Accelerator Vs Incubator – Which Will Do More for your Business?
If you are a newbie in the world of startups with a fresh business idea, or if you are looking for guidance, support and mentorship for your startup idea without necessarily seeking for funding, what you need is a business incubator to help you learn the ropes and get support and constructive criticisms from other startups like you.
But if you’ve already learned the ropes, maybe even started the business to an extent and need capital and support to grow your business, a startup accelerator would be in the best position to help your business succeed.